Speech by Hon'ble President of India, Shrimati Pratibha Devisingh Patil, at the Inauguration of the Regional Conference on "International Trade Law and Legal Aspects of Trans-border Investment"

Ladies and Gentlemen,

I am pleased to inaugurate the International Law Association Regional Conference on "International Trade Law and Legal Aspects of Trans-Border Investment". ILA is a body constituted for the study, development, understanding and respect for international law. That the Conference is being held in India, is recognition of the contribution of the Indian chapter of ILA to international jurisprudence.

I would like to congratulate the organizers for choosing issues relating to the various facets of international trade and investment as the theme of the Conference. These topics and climate changes are currently of great relevance and interest. It was last year, when following the sub-prime crises, the world witnessed the financial collapse of reputed companies in the developed world, which led to a global economic down-turn. The world, over the past few decades, had been transformed on account of greater transborder movement of goods, services and capital. The advancements in technology had resulted in making connectivity, easy and rapid. Thus, when the global economy went into a recession, of a kind not seen since the Great Depression of the 1930s, it very quickly sent tremors far and wide. Infact, no country in the globalised and increasingly integrated world was secure from the adverse fall-outs of the financial crisis.

The slowdown was accompanied by a phase of volatility in oil prices and high food prices. In the developing world, development efforts were negatively impacted and concerns about rising poverty and hunger levels were aggravated. This profiled the need for the international community to continue to focus on development issues, including food security.

The financial crises brought to the fore the need for coordinated global action to take immediate steps to deal with the emergent situation and to formulate medium and long term policy measures as well as undertake structural changes to make the world economy more stable, more equitable and more responsible. Countries took financial and monetary measures to deal with the crisis. The G-20 mechanism provided a platform for discussions at the political level. These interventions have been able to contain the contagion and signs of recovery are on the horizon. However, for a more robust financial system in the medium and long term, new thinking and actions are needed in many areas, in particular:- one, the design of the global financial structure; two, financial regulation and surveillance rules; three, a better way of assessing systemic risk; and four, looking at trade and investment from the development perspective. There is widespread recognition that reinvigorating world trade and investment is essential for restoring global growth.

The post-crisis global financial architecture cannot continue to have the same characteristics as that of post-World War II. In the interconnected world, the global rules and standards for financial regulation, banking operations, ratings of credit agencies and oversight, should be more clear and stringent. Harmonization and greater consistency of national policies on these issues, wherever necessary and possible, would require greater systematic cooperation and information sharing between countries. The new Financial Stability Board has been mandated to extend regulation and oversight to all systemically important financial institutions, instruments and markets. This, however, must be accompanied with reform of the multilateral financial institutions to make them more representative of the diverse interests and more reflective of contemporary realities, so that these institutions are more effective. I believe that even as we address the complexities of improved global financial governance, reducing poverty and hunger as well as attaining the Millennium Development Goals, should remain the essential objectives of the world.

Contraction of global trade resulted in huge social and economic implications affecting the rich and the poor nations in varying degrees. In this scenario, the need for pushing ahead on the Doha Round of trade talks with its focus on the "development dimension" is of immense importance. The growing tendency of protectionism amongst some countries will retard the stabilization process. It would be well to recall that the environment in which developing countries are expected to fulfill the aspirations of their people, is far more complex than that in which developed countries moved ahead. The developing countries also need to manage and balance many more commitments in their trade and development policies. Hence, the concerns of developing countries about the welfare of their people must find a place in the global agenda.

As the harshness of the recession seems to tone down, companies are looking for new business opportunities. Also, encouragingly for us in India, industrial production has posted an upward growth. As the fourth largest economy and one maintaining growth even in a difficult context, India is an important propeller of the global economy. As an investment destination, India rests on strong fundamentals. It has a large market, skilled manpower, independent judiciary and a comprehensive legal and economic infra-structure. At the same time, Indian companies have been investing overseas either through mergers and acquisitions or direct investments. It is, therefore, natural that as a country which receives investments and makes investments overseas, there is a deep interest in issues of financial regulation, assessment of different types of risks and systemic supervision of capital flows. We also have an interest in the legal frameworks prevalent in countries with which we have trade and investment ties.

In terms of legal frameworks for business enterprises, these should be predictable and designed to ensure that they can operate smoothly. To attract investment, to promote production and to support technological upgradation, legislation and policies need to be progressive and transparent. Equally important is the emphasis on responsibility and accountability of the corporate entities, whether operating in the national space or across countries and continents. The private sector has a responsibility to contribute to an environment of confidence by improving risk management, including through attention to governance issues. Reckless behaviour and taking excessive risks, will only mean that lessons have not been learnt from the crises. Such approaches can no longer be acceptable. Hence, businesses must comply with rules and display a sense of their commitment in promoting socio-economic goals.

The legal aspects of international trade and investment that deal with complex issues like WTO rules, Intellectual Property Rights, Regional Trade Agreements (RTAs) and preferential trade agreements, dispute conciliation and arbitration mechanisms, are a challenging task. In the exercise of framing domestic laws and formulating rules, as well as in their implementation, the contribution of all stakeholders is necessary. International obligations need to be kept in mind. At the national level, dialogue mechanisms between Government, businesses, lawyers and economists are very useful in policy formulation and implementation. I am glad that in this Conference, representatives from the Executive, Legislature and the Judiciary of India are participating.

The legal community is part of every stage of the business process from preliminary discussions to dispute resolution. A key challenge in this endeavour is knowledge capital. India must build a capacity of lawyers, paralegals and professionals who are conversant with international trade and investment laws and able to navigate their complexities. At the same time, our academics and legal educational institutes must be able to keep pace with, and indeed help in shaping, the global business environment.

As the Conference discusses the various options and alternatives, it would do well to remember that the basic objective is to promote an equitable world, to have a more regulated economic activity, and to set up systems for better surveillance, so that no one can trigger future crises that can destabilize the world.

I am happy to learn that this Conference will address the issues of WTO negotiations, regional and bilateral trade agreements, investment protection treaties, Asia-Pacific cooperation, dispute resolution and other matters of relevance to the current economic and legal conditions. I wish you all the best in your deliberations and am confident that the Conference will throw new light and new ideas on how to address the legal issues that challenge the global trade and investment regime. I wish the foreign delegates a pleasant stay in India.

Thank You.  
Jai Hind.